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The essence and basic concepts of Forex.
Forex is known as the foreign exchange market, which was formed in 1971 when the international trade transitioned from fixed exchange rates to the floating system. The daily volume of transactions on this market is estimated at 4 – 4, 5 trillion dollars a day, which ranges from one to three annual budgets of the United States. For comparison I’d like to tell you that the daily turnover of the US securities exchanges is about 300 billion dollars and the stock market is 10 billion dollars.

The main principle of Forex trading is the constant exchange of any convertible currency to a foreign one, where the rate of one currency relative to another is determined by such essential things of economy as supply and demand.

Let’s call the essential features of this giant market. First of all it’s known for it’s extremely high liquidity. This market operates the enormous money supply and provides the complete freedom for all traders when opening or closing positions on any of existing quotations. Then this market is also known for its accessibility. In other words this means that almost everybody can trade on the market, regardless of his income and size of the initial capital. Besides this there’s a flexible regulation system of trade organization. The matter is that a particular currency market position may be opened at predetermined intervals at the request of a trader that allows him to plan his future activity.

Forex traditionally has no fees, except for natural market spread between bid and ask prices.
By the way the market orientation or in other words the movement of currencies has a definite direction, which can be traced over a sufficiently long period of time. The matter is that each currency shows its unique ability to change over time, which gives money managers the possibility of manipulating the market.

One should be able to analyze the market in order to derive the regular profit from this complicated and interesting activity. It’s necessary to take into account many factors that can influence the price. Forex trading is a very interesting work as I have told above. Markets are constantly moving and changing. You can have an excellent opportunity to read various financial news. You’ll have to spend much time analyzing the situation and making decisions, managing risk. By the way the result of this work can be obtained not only in the form of income, but there’s also a moral aspect. There’s a sense of self – confidence, composure and determination in this case.

Many guys are used to comparing it with a casino. But in fact it’s not so indeed. The matter is that in casino you’ll have to rely only on your luck and nothing else. But Forex trading requires your persistent learning different economic laws.

As in every other niche of our life foreign exchange market needs some education.

Of course, one can start forex trading and be quite successful about it. But sooner or later the losses will come. This is when you might think “Why didn’t I start with a nice forex book?”

This does not imply that after reading even the best forex book you will start making money, but this knowledge will save you from
lots of traps.

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Features of margin trading
Transactions in Forex are carried out according to the principle of the margin trading. The margin trading has a number of features that has made it so popular.

A small start-up capital allows executing a transaction with the amount which is in excess of the real one in many times even in tens and hundreds times. This excess is called leverage.
In general the trading is carried out without the real money supply. Thus an opportunity to open positions for both buying and selling foreign currencies is provided for anybody

By the way opening an account and transferring money on a deposit is the first thing that should be done before the start – up of trading. These funds can allow you to execute deals with foreign currencies using the whole power of your leverage of course. To cut a long story short a deposit is the main tool of a trader besides his intelligence of course.

One of the terms of Forex trading is the leverage which I have already mentioned above. In other words it’s the coefficient, which shows how many times the size of your open position can exceed the amount of your deposit. Different companies provide different leverages but as usual it ranges from 10 to 100.

Now let’s go on with trading terms. The margin is a part of the deposit required to open and maintain a position. The minimum level of margin is the limiting value of the deposit at which a broker has to close the client’s position forcibly in compliance with the current rate. It goes without saying that different brokers set different value for the minimum level of mortgage such as from 50% to 10% of the required margin for example.

Now let’s consider the mechanism of trading in details. If you have an open position on the current balance of your trade account then you can have an opportunity to see how it is constantly changing in response to changes in exchange rates. And if the size of the floating loss will be equal to the difference of balance and the minimum amount of margin then the position will be forcibly closed by the urgent interference of a broker. Otherwise, a broker would have to assume part of your loss.

A dealing center constantly monitors the status of your account. This is done in order to not allow you to lose more than you have placed on your trading deposit. To avoid a forced closure, you should not open too big positions for your deposit. You should to be on time with closing your loss – making positions. Moreover it is highly recommended for you to put the stop order right on your open position in order to avoid big losses.

As in any other niche of life Forex needs some education.

Of course, one can start forex trading and be quite successful about it. But sooner or later the losses will come. It is precisely when you might think “Why didn’t I start with a good forex book?”

That does not mean that after reading even the top forex book you will start closing trading positions with huge income, but this knowledge will save you from
lots of troubles.

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Gold is the strongest asset isn’t it?
Don’t you mind my informing you that over the past five years the average annual return on investments in gold has approached to 148% per annum? This is an absolute record for financial instruments. For the past six months, the price of precious metal has risen almost by half. Naturally under the evident conditions of financial instability, when the future of the US dollar remains unclear and banks sometimes refuse of returning deposits, more and more people in the world think about investing their savings into gold. Will the yellow metal become more expensive in the nearer future? Does it threaten to a real collapse in prices? I believe that you also doubt somewhat about this.

Some guys are used to pointing out to a worsening economic situation in the USA. That’s why they tell that they need to find an alternative asset to all kinds of paper money, being printed without proper security. Just put it simply. I hope you know that the longer the United States run the printing press, the cheaper the US dollar. And the price of two thousand dollars
per troy ounce is not far off. You know for sure that America since 1959 has increased the money supply by 50 times, while gold reserves have increased only 27 times.

Some people believe that virtual gold or non-cash monetary system, pegged to the ounce, may be regarded as the only one real alternative to the dollar as the new global currency. Governments have the right to print money and their regulations are always manipulated. Falling confidence in the dollar makes the probability of occurrence of gold equivalent, or “digital gold”, this always can be exchanged for real gold. Though the idea to replace the dollar with gold captivates can’t be considered to be a new one. Conditionally, everyone knows that the yellow metal out of competition, because unlike paper money gold can not be printed. Even now, using all the technological innovations that gold production can not grow faster than 6% per year. It is a sort of ideal money isn’t it? The value of gold can not be affected even by the IMF, with its huge reserves. The fact is that in the case of “sale”, this precious metal doesn’t enter the market at all. In addition, the IMF can not conduct the transaction, if there is the slightest threat to reduce the market price of gold.

After that recent letting one bullion dollars go on lending to developing countries affected by the crisis the general amount of paper money has increased once again. And their cost has obviously decreased. And as soon as doubts about the stability of the dollar are confirmed, the gold will be among the first to show mad growth. And you can benefit from this.

At this moment precious metals’ attractiveness is on the upwards trend. People who want to get cash for gold are creating a unique opportunity on the market.

In case you are one of those who plan to rise up some cash for gold, then please make sure that you know the typical traps of the cash for gold.

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